Over the weekend, we moved our corporate offices. That means I’m still settling in, and trying to remember where the break room (and my lunch!) is. I’m also basking in the glory of a commute that’s only a third as long as it used to be.

Sometimes a change in scenery or daily routine can offer you a new perspective on other things. Like the markets. And that’s what I have today.

My take: The markets haven’t gotten SAFER in the last several days, days accompanied by a fresh melt up. I believe they’ve actually gotten RISKIER. That’s not the popular sentiment on Wall Street, of course. But look at all that happened over the weekend …

Are you unlucky enough to own any Brazilian stocks? Or something like the iShares MSCI Brazil Capped ETF (EWZ)? Because it plunged almost 8 percent earlier today after Brazilian President Dilma Rousseff won re-election. That sparked fears that nothing will change with regard to economic policy there, extending a multi-quarter economic slump.

Or how about crude oil? Many investors have been viewing the commodity as an economic bellwether, a pure, market-based indicator of the health of the global economy. If that’s the case, they better get out the crash cart … because oil just dropped below $80 a barrel! That’s the lowest level since June 2012.

Oil just fell to $80 a barrel … the lowest since June 2012.

Then there’s the European Central Bank’s latest gambit. It concluded its large, multi-month “stress test” of the biggest European banks.

The exercise was supposed to restore confidence in the health of European banks and the euro-zone economy, in part because only 25 banks were found to have gaps in capital totaling $31.2 billion. Several institutions already filled them by raising capital during the examination process.

But after an initial pop, the markets over there rolled over … with bank stocks shedding 2 percent, 3 percent, 4 percent, or more on the day! Some leading Italian banks plunged anywhere from 5 percent to 18 percent!

Maybe it’s because all the effort the ECB is expending isn’t doing squat for the real economy! Stress tests, hundreds of billions of dollars worth of European bond purchases, and other efforts are just helping inflate asset bubbles outside of Europe’s shores, while doing virtually nothing to spark loan demand at home.

“I’m recommending you lighten up into this rally.”

Bottom line: We’ve surged almost 1,000 points off the low in the Dow Industrials in just a few days. But many of the same old challenges are still with us, along with a host of new ones. So from my new perspective at my new desk, I’d say the markets are much riskier here. And that’s why I’m recommending you lighten up into this rally.

So what’s your take? Do you feel better about stocks now than you did earlier in October? Or worse? Do you think we’re ready for a year-end rally? Or is this V-shaped bounce coming to an end? As always, the best place to share your view is right here.

Our Readers Speak

Ebola remains on the minds of many of you, given the news of new infections and the fight over quarantining of health care workers and others who might be exposed to the virus.

Reader Bob S. said: “Absolutely it makes sense for investors to have Ebola concerns. This is a very serious and deadly disease. The five previous outbreaks in rural Africa all ended when panic drove Africans to flee the towns and cities and hide in the rain forest in tents.

“If the same thing happened in an American city, much of the economy would grind to a halt. Resuming normal activities would take awhile, as well. So yes, an Ebola outbreak here would have very serious economic consequences.”

To avoid that from happening, Reader Steve had the following suggestions: “Effective quarantine of at risk areas such as Liberia, and Guinea, aided aggressively by health care workers from around the world, would work. After all, the most effective way to stop the disease is to quarantine patients in isolated rooms. At least a quarantine for a sufficient number of days of people traveling from those affected areas before we tempt fate of our general population.”

Reader Bob B. was relatively angry that hasn’t happened yet, too. He said: “Our government is being irresponsible in not closing our borders to any flight coming from the Ebola-infected countries. I just don’t understand the reasoning behind this decision.”

As for the markets overall, Reader Paul had this warning: “There is way too much irrational exuberance leading to wild up days. Going up too fast in deep water leads to the bends. I’m waiting for the stomach cramps.”

I tend to agree with you, Paul. I’m actually selling into this strength out of concern it doesn’t have staying power. If you want to share your strategies for this market, remember to stop by and comment here.

Other Developments of the Day

Should medical personnel and others who may have been exposed to the Ebola virus be quarantined? A handful of states, including New York and New Jersey, are arguing about it with the federal government.

I’m interested in your take here — do you think the feds or the states are right when it comes to quarantine procedure? Personally, I’d rather we err on the side of caution with such a deadly disease.

A second victim in Washington, 14-year-old Gia Soriano, died over the weekend following yet another senseless school shooting rampage. It’s a shame our kids have to do “active shooter” drills these days, and it’s ridiculous that troubled teenagers can get their hands on guns so easily.

There wasn’t much happening on the economic front today. But we did learn that pending home sales rosejust 0.3 percent in September, less than the 1 percent gain economists were expecting. Purchases rose in two regions (South, Northeast) of the country, and fell in the other two (Midwest, West).

I like to save pennies (and other change) in a jar at home, then cash it in before my family goes on trips. But according to the Wall Street Journal, one single buyer is stockpiling a heck of a lot more metal!

Specifically, the paper says one entity now controls more than half the copper stored in London Metal Exchange warehouses. That percentage has risen as high as 90 percent in the past month, meaning the buyer controlled as much as $850 million in copper.

Until next time,

Mike Larson

P.S. Martin has personally been validating the accuracy of our stock ratings model with real time data for more than a decade. Based on that data, plus testing of what he considers to be the most reasonable and prudent trading approaches, he has now built what I believe to be the ULTIMATE wealth-building strategy. Check out the details of his Ultimate Portfolio here!

Mike Larson graduated from Boston University with a B.S. degree in Journalism and a B.A. degree in English in 1998, and went to work for Bankrate.com. There, he learned the mortgage and interest rates markets inside and out. Mike then joined Weiss Research in 2001. He is the editor of Safe Money Report. He is often quoted by the Washington Post, Reuters, Dow Jones Newswires, Orlando Sentinel, Palm Beach Post and Sun-Sentinel, and he has appeared on CNN, Bloomberg Television and CNBC.

{25 comments }

TomMonday, October 27, 2014 at 4:40 pm

Personally, I think the market is headed up for three reasons:
1. Success of GOP candidates in the upcoming elections
2. Strong retail holiday sales
3. Rising consumer sentiment

So, in spite of the many issues and concerns you rightfully point out, I think the market will finish strong this year. Don’t be surprised to see the Dow finish the year around 18,000. Meanwhile, gold and bonds will languish.

Mike SMonday, October 27, 2014 at 5:48 pm

Tom,
A reality check… During the past 100 years every Stock Market failure has occurred on the watch of a Republican Administration. and every Stock Market Recovery has occurred on the watch of Democratic Administrations… During the past 100 years the gains in the stock market under Democratic Administrations has been almost 10 times the gains under Republican Administrations…

In my opinion, if the Senate goes to the Republicans, this stock market is headed for another pull back because of their policies…..

There is a great book on the New York Best seller’s list called “The Politics of Income Inequity” by Stiglitz… You might want to rd it… Basically, under Republicans Income Inequity goes up and the markets faultier and under Democrat Income Inequity goes down and the markets flourish… That was one of the first “Rules” I learned in Business School many years ago…

jrj90620Monday, October 27, 2014 at 6:05 pm

Hope you’re right and govt worshippers lose,in the coming elections.In any case,lower oil prices should be a huge boon for the economy.

jrj90620Monday, October 27, 2014 at 6:03 pm

Income inequality is a result of Democrats policies,that discourage success and vilify working hard and getting ahead.So,less people trying to get ahead,means the ones that do,have much less competition and receive higher compensation.What we need are Republican/Libertarian policies that shrink govt and let people keep what they earn.Here in So California,it seems like most recent doctors and dentists have Asian surnames.This is because so many Americans have quit trying.We need to gradually wean Americans off govt dependency.Let them have some self worth and earn a living.

Wallstreet catch 22.
When I retired, I moved all funds to a dollar money market fund. The thinking was to wait until after the elections. We know the market is rigged by big dollar players so what is one to do? Plunge back in, let it sit there and lose due to inflation?

How many in the same boat?

Mike SMonday, October 27, 2014 at 6:34 pm

Many left the stock market during the Cheney/bush Stock Market Crash… Unfortunately many Americans do not know about Political/Economic History…. The Republican Cheney/bush Stock Market Crash of 2007 was halted under Obama (A Democrat) in 2009 just as Republican Hoover’s Stock Market Crash of 1929 was halted under FDR (A Democrat) in 1932…

CamiMonday, October 27, 2014 at 7:37 pm

I for one am in the same boat as you and I am not willing to now jump over board and invest my savings at the top of an unsupported market. Patients is the watch word and I think in the end you will win out. To late to be guided by yesterday, lets let tomorrow be our goal. Best of luck to you.

AllenMonday, October 27, 2014 at 7:12 pm

I just went short this afternoon

Mike STuesday, October 28, 2014 at 1:16 pm

Ooops…. Another who failed to read the history of 1932-1982 which was the longest and greatest increse of the Dow Jones Industrial’s in history, all of it during Democratic Domination…. :)

anthony gMonday, October 27, 2014 at 7:25 pm

The crony deals are about to come to an end. Atlantic city in bankruptcy. The bubble in Ny real estate. The massive stimulus curse is about to unfold. .

CamiMonday, October 27, 2014 at 7:34 pm

I think your advice is spot on! Lighten up into this rally. Do readers expect stocks to continue to sky rocket? Is this rally driven by fundamentals and the future or the crowd and pigs hoping for a never ending advance? I think you Mr. Larson are right on, lighten up on your positions. A lovely breath of fresh air for the taking heads who only want you to put more and more in.

Bill B.Monday, October 27, 2014 at 8:14 pm

I am very disappointed that Mike Larson, who appears to be an intelligent, open minded, free thinking man would blame these murders in Marysville Washington on an inanimate object. I have never seen a gun sprout arms and legs and start killing people. Guns are not the problem, people and kids are the problem. When I grew up, guns were everywhere, by the backdoor to the porch, over the mantle, in the rear window of my dad’s pickup truck, but there were NO kids killing other kids and guns were everywhere. I know Larson and many others don’t want to hear the facts but the facts and the truth is that EVERY ONE of these mass killings, colleges, malls, schools in is in a BLUE (LIBERAL) State or city and especially significant is that EVERY killer is a democrat or liberal, several of them volunteering to work on obama’s presidential campaigns. The biased liberal media openly and expectedly ignores these facts but you as a supposedly unbiased organization and newsletter should tell only the facts, no spin and no bias. Don’t try and tell intelligent people that it is the gun’s fault that all these senseless killings occur. Bill

HowardTuesday, October 28, 2014 at 12:52 am

Bill B.

Maybe it should have read ‘Morons with Guns’

Kim BlakeTuesday, October 28, 2014 at 11:39 am

I agree that “guns are not the problem.” But kids are being trained with a victim/scarcity mentality by their schools and entertainment. That every child should be taught confidence, passion and compassion, with an abundance mentality, is the subject of my blog article, http://imaginew.weebly.com/blog/category/soccer%20momssave%20us775d283111 . For example, every child should be taught/mentored about wise money investing. Their hero could be Warren Buffett instead of a violent, unrealistic, vengeful weirdo. Things that can be done with profits can be filled with adventure and discovery.

PaulSaturday, November 1, 2014 at 10:29 pm

Kim, you have touched on the American tragedy, the glorification of violence, the video “games” which all kids prefer and they enter a fantasy world of macho killing. America now glorifies our military in every possible way, making our soldiers feel proud of our foreign wars which only harden those who resent and hate America.
Instead we really need to change our national conversation and values and elevate intelligence, reverence for life and our planet, devote our national resources to improving life in every way and not devoting our billions to ever more powerful weapons of destruction. Thank you for including this topic. Which way will we turn as a nation; the road to a healthier happier nation or towards further self-destruction? I will hope and pray for the former.

Constantin SMonday, October 27, 2014 at 10:11 pm

I am not so scary of Ebola, as I am scarried by the market. We know that Ebola can be transmitted in several ways, but we do not know what the market will do tomorrow and after. Sometimes, market uncertainty could be much worse than ebola. :)

BarbaraMonday, October 27, 2014 at 11:00 pm

I’ll keep this short. If ebola is is saliva its due to become airborne with a sneeze or cough.. how do 10,000 people become infected if its difficult to become infected? Its stupid not to quarentine anyone who arrives in the United States who has been in African countries affected by ebola. The US ARMY has now made policy to do so. Our President and the CDC DOESN’T SEEM TO GET IT. How dare this president set policy not fully protecting US citizens!

D BennettMonday, October 27, 2014 at 11:15 pm

I am short this market now, money is flowing out of the market into the safety of bonds. My other indicators also say go short, not listening to the talking heads on tv.

Rob JonesMonday, October 27, 2014 at 11:58 pm

When you consider that IF EVEN ONE PERSON with EBOLA passes the sickness to just one other person each day. You will have a situation where the infected people will double EVERY DAY 128 people will have EBOLA from that one person in seven days. And 32,768 will be infected in 14 days. AND 4,194,304 in JUST 21 days. After this you could have upwards of 4 million more being infected EACH DAY. So now it doesn’t sound so bad to quarintine each and every person infected NOW!!! :)

Richard SeifertTuesday, October 28, 2014 at 12:05 pm

There’s no mystery why Obama isn’t protecting us from Ebola …… it keeps other issues
from the media, allowing him to continue his anti american agenda.

Richard BerggrenTuesday, October 28, 2014 at 12:22 pm

How can you have been listening intelligently to the news these past few weeks and then demand that we ban flights from ebola infected countries? Ther are NO direct flights to the US from those countries. They go to Europe and then get another flight to the US. It is this kind of ignorance that fuels fear and unnecessary outrage. Learn the facts.

Richard BerggrenTuesday, October 28, 2014 at 12:36 pm

How can people follow a news story like ebola and not know the facts/ If you want to ban flights from countries with ebola, you have been successful. There aren’t any. Never were any. People flying from Africa have to go to Europe and then get a flight to the US. It is ignorance like this that produces irrational fear as well as “solutions” that are non existent.